India’s transport infra to grow at higher rates over five years: Report

Transport infrastructure of India will grow at higher rates over the next five years on account of a string of measures, including increased spendings on road and rail projects, says BMI Research, a Fitch Group company. Other factors that will propel growth rates include reform measures and new policies, encouraging private participation, it said. The latest FY 2017-18 Union Budget increased allocations for National Highways Authoritys (NHA) by 24 per cent and Indian Railways by 8.2 per cent to support significant expansion plans. Additionally, the government proposed a new Metro Rail Policy aimed at easing and encouraging the use of PPPs for urban transit projects, expanding the number of opportunities for private parties to invest in infrastructure. The latest forecast of the research is that the transport sector will grow by 6.1 per cent in real terms in 2017 and average 5.9 per cent annually through 2021. PPPs will become increasingly important when financing and operating many upcoming transport projects, as the government seeks to tap private capital to supplement its limited fiscal capacity. Ongoing improvements to India’s regulatory and operating environment will help spur private investment in the transport sector, but challenges such as acquiring land and maintaining a stable revenue stream pose risks to potential participants.